An Evaluation of Amazon.com

Amazon.com

Identification/Description -- Amazon.com, as of 2009, was the world's largest book retailer in the world. However, the company is far more than a bookstore in 2012 -- it is a retail giant, handling almost $50 billion in multinational electronic commerce, making it the world's largest online retailer. The company was created in 1994 as a bookstore, but soon diversified so that today it sells music, books, software, apparel, furniture, food, toys, electronics, and its own proprietary reading and tablet device, the Amazon Kindle (Investor Information, 2012). Amazon transformed itself from a specialty retailer into an online shopping portal, taking a cue from auctioneer eBay, which set itself up as a mediator between buyer and seller. Amazon's marketing strategy has been to provide a sophisticated website that cross-promotes products; materials at a significantly lower price, and an ability for the consumer to personalize their "store," receive updates about products they may be interested in, have browsed, or seems appropriate for their buying patterns (Spector, 2000). The company is particularly interesting because of the manner in which they market to their customers- both current and potential. They are an integrated marketing communications company that uses smart algorithms to track purchases and browsing habits, make suggestions, and even email customers when one of their favorite authors or genre styles has something new.

Part 2 -- The Big Ideas

The Overall Burden - How people approach the choices they make about resources matters A LOT to our lives -- and we'd better understand what's going on. Amazon's approach to this is to not only provide solution oriented structures for their customers, but to track purchases, make inferences on searchable statements, and aggressively and actively present new opportunities to customers. The idea is that if customers get into the habit of using Amazon, they will not shop locally, and Amazon will cannibalize retail dollars not just from books, but from anything it could possibly ship at a lower price. For instance, a customer may like an author, Kathy Reichs (CSI type detective stories); that custom will receive emails when Reichs' new book is available for pre-purchase with the purchase price or lower guaranteed; within this period the company will also send emails about books that are similar. Similarly, returns are easy and not questioned -- if it is Amazon's fault, returns are free and can be done at the computer with details, shipping labels, etc. online and that item picked up by UPS. If it is the customers' fault, Amazon still makes it easy -- the customer only paying the postage for the return.

Idea #3- Voluntary exchanges makes both sellers and buyers better off, and markets are an efficient way to organize that exchange. Amazon puts buyers and sellers together in a way similar to eBay -- in which items may be sold through Amazon, the company taking a portion of each sale, but having the seller ship the item, etc. Amazon, however, is the advertising medium, obviously advertising its own products along with the other data. So, if a customer wishes to purchase a Canon LD5 camera, they can choose from a new one from Amazon, to other new ones and several used, all based on Amazon's algorithm.